Understanding Operations Logistics and Supply Chain Management

This report identifies the key operations, logistics and supply chain issues faced by Dacia, a manufacturing company. It discusses the logistical challenge of inadequacy in supply of semiconductor chips, operations management issue related to sustainability, and supply chain management issue related to improvement in quality and speed of delivery. The report provides recommendations to overcome these issues and attain profitability. The delivery system and infrastructure of Dacia supports the auto-mobile market by starting production of vehicles according to consumer demand. The report concludes with a discussion on the triple bottom line approach and how quality management and improving business relationships across the supply chain can help the company gain success.

Understanding
Operations Logistics
and Supply Chain
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Manufacturing companies have to ensure that global supply chain is working smoothly
and there are no logistical problems so that high quality issues are delivered to costumers in a
timely manner (Pettit and et. al., 2019). Auto-mobiles Dacia is the manufacturing company
selected for this report. The company was founded in the year 1966 and currently provides auto-
mobile in European countries along with Azerbaijan, Algeria, Reunion and Morocco. This report
identifies the key operations, logistics and supply chain issues faced by Dacia. This report
clarifies the ways in which operation function serves the auto-mobile market with critical
analysis of each component of operations function. Recommendation are provided to the
company on the basis of this analysis considering the triple bottom line.
MAIN BODY
Operations management is defined as the brand of management which focuses on
designing and controlling manufacturing processes and planning business operations to produce
high quality goods for consumers (Rajeev and et. al., 2017). Supply chain management refers to
the process of actively managing activities throughout the supply chain to maximise consumer
value and gain sustainable competitive advantage. Both of these management areas are important
for manufacturing companies as they support the firm provide high quality goods to consumers.
In case of Auto mobiles Dacia, the company faces various operations and supply chain
management issues which impacts stable profitability and future growth of the company.
The main logistical issue faced by Dacia is the logistical challenge of inadequacy in
supply of semiconductor chips. This is an important raw material which is essential fort mass
production of vehicles. The 2020-2021 global chip shortage crisis is an ongoing challenge in
which demand for integrated circuits is greater than the supply. The car manufacturing industry
is also affected by this logistical challenge. Dacia plant in Mioveni has stopped production
because of the global semiconductor crisis. This has affected 50%-60% of production activity t
the company (Chips shortage stops Dacia production, 2021). The main reason behind this
logistical shortage is COVID-19 pandemic, China-US trade war and rising prices of raw
materials.
Dacia is also facing the operations management issue related to sustainability. The rise of
climate change awareness has increase consumer and government pressure on automatise
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companies to enhance sustainability of business operations (Farah, Ramadan and Harb, 2019).
Operations managers at Dacia are responsible for implementing the best practices with a concern
for the three pillars for sustainability which are social environmental are economical. Dacia has
been able to expand through Europeans it offers value for money cars. These products do not
offer exiting features and can be purchased at low cost. European Union has recently
implemented vehicle emission standards to reduce car pollution in Europe.
The cost of achieving emission compliance specifically with electrified power trains
posses a threat to the profitability and success of Dcaia (Dacia battles to keep prices down as
CO2 pressure rises, 2020). This is because the company has relied on low cost products to
expand and succeed in various international markets and upgrading the products to meet
emission standards can make the cars of Dacia unaffordable to low income group and hinder its
future growth. The firm needs to eliminate this issue immediately and focus on creating
sustainable and low cost manufacturing operations to attain profits in increasingly green society
and manufacturing environment.
Supply chain management issue which is affecting profitability of the company currently
consumer demand drive for improved speed and service. Quality and speed and are becoming as
important to pricing when it consumers to consumer decision making. Time wastage and faults
in the products damages consumer experience significantly and directly impacts consumer
retention (Birkel and Müller, 2020). Dacia has gained Europe-wide success with its recent Dacia
Sandero Model. It was the best selling model of the company in Spain and occupies leading
position in France. The supply chain management issue of low speed has affected quick delivery
of orders on Dacia Sandero Model across Europe. This product has become difficult to find
object in France. Apart from this the consumers who placed orders for the car in February of
2021 were not able to gain their products until June 2021 (The success of Dacia Sandero leads to
delivery delays, 2021).
This overshadows the popularity of the car and negatively affects consumer decision
making in relation to the car. Many French dealers of Dacia Sandero Model have complained
that the company did not manufacture adequate number of cars last years which caused this
shortage of supply across Europe. The company will not be able to maximise profitability with
this new offering because of the supply chain issues in Europe. Late delivery of products can
also lead to consumers changing their decision because of availability of new products by rival
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firms or change in consumer preference during the time period of late delivery. The late time
period fr delivery in case of Dacia Sandero Model is 2 months which increases the risk of
consumers changing their decision decision.
Dacia is not considered an innovative or high quality car manufacturer and there is high
requirement to enhance quality of products offered by the company. This supply chain issue has
also affected the recently launched Dacia Sandero Model. This model has succeeded in European
markets because of its value for money but is not a reliable auto-mobile product. It has the same
1.0 three cylinder three cylinder turbo petrol with 100 horsepower. The engine only offers 2,500
revolutions per minute and after that it starts to cough and vibrate (Dacia Sandero Stepway: It’s
all the car you need, but not quite the car it should be, 2021). Apart from this the electric
windows also stop working suddenly. Therese reliability and quality issues need to be considered
by supply chain managers at Dacia as it can lower the success streak imitated by this model
recently.
Dacia needs to take quick action to eliminate these logistics, supply chain management
and operations management issues in order to attain profitability and recover from the loss
caused by the pandemic. Logistics issues related to inadequate supply, supply chain issues
related to improvement in quality and speed of delivery and operations management issues
related to sustainability jointly affect the future growth of the company (Chen, Wang and Huang,
2020). Dacia needs to work on these issues so that industry position in Europe is not
compromised and the company expands t newer markets successfully.
Operation functions such as delivery service manufacturing process and infrastructure of
the enterprise play an important role in production of high quality goods at the company. In
context of Dacia the delivery system used by the company is completely focused on the final
consumer. In this delivery system the dealer network transmits daily orders placed by the
consumes to the factory. The manufacturing plants of Dacia use this information to position
production of vehicles by five day production sequences.
The advantage of this delivery system at Dacia is it results in better marketing of the full
diversity of the product line and reduction in costs of commercial negotiations. The
disadvantage of this delivery system is that it increases the dependency of the company on
suppliers (Wu and et. al., 2020). This delivery system is one of the reasons behind the supply
chain issue of late delivery faced by the company. The company is dependent on suppliers and
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the semiconductors crises has forced the company to abandon manufacturing activities. This
created the supply china management issue of later delivery of products.
Dacia utilizes the service of fives to build a new assembly line in manufacturing plant in
Romania which will support the delivery system of the company. This decision is made because
of the Renault-Nissan-Mitsubishi Alliance and the new assembly goes from the paint-shop to
final vehicle quality approval for shipment to dealers. The automation services gained by Dacia
under this infrastructure include FIFO from paint-shop to trim delivery conveyor, pre-trim line
with adjustable height and drop on wheels and quality inspection conveyors prior to shipment.
The advantage of this manufacturing infrastructure is that it facilitates quick production
of vehicles without affecting quality of the final product (Svensson and et. al., 2018). This helps
the company support the delivery system by finishing production of vehicles according to
consumers orders to ensure timely delivery of products. The disadvantage of this infrastructure
is that it involves rocking-horse which require management attention, time and panning to make
it work effectively.
The delivery system and manufacturing infrastructure of Dacia support the auto-mobile
market because the sale of products in the auto-mobile industry is not stable. Auto-mobiles
specifically cars are not a frequently purchased commodity by middle income and low income
consumers. This decreases the stability of demand for car manufacturers. Low global sales,
international trade ambiguity, high cost of R&D and economic uncertainty are some of the
factors which have made the auto-mobile industry highly volatile (van Kemenade and Hardjono,
2019). The delivery system and infrastructure of Dacia enables the company to handle this
volatile market by starting production of vehicles according to consumer demand.
Delivery system and infrastructure of Dacia benefits the company as the firm is able to
avoid over-stocking while the limitation is that it requires previous planning and predicting
future scenarios to maintain sufficient stock. Any disruption in supply chain can affect timely
supply of products under this delivery and infrastructure. This can also be seen in case of Dcia as
disruption caused by COVID-19 and shortage of semi-conductors ion a global scale negatively
affected the supply of Dacia Sandero Model. The delivery system and infrastructure helps the
company face market conditions in the auto-mobile manufacturing sector but it has also created
some supply chain and operations management issues which need to be resolved quickly to
ensure continuous growth of the company.
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Triple bottom line looks at the tree elements of sustainability which are social,
economical and environmental impact of the company. Dacia is suggested to focus on quality
management so that the consumers gain high quality products at low cost. Quality management
refers to The supersize of overseeing tasks, activities and processes related to production of a
commodity so they are able to reach high and consistent standard of quality (O'Brien, 2018).
Quality management will help the company deal with consumer demand to gain better quality
products. In addition to this the company will also be able to enhance the speed of production by
minimizing every kind of wastage including time wastage. This will help the firm produce
adequate amount of stock to deliver consumers products in a timely manner.
This recommendation falls among the triple bottom line because it will help the company
increase profitability through consumer retention. Quality management will lead to waste
reduction and optimal utilization of resources. This will reduce negative environmental impact of
the company. This recommendation will cause social benefit as it will provide low income
consumers good quality vehicles at affordable price.
Another recommendation of Dacia is to improve business relationships across supply
chain. This involves building close relationships with suppliers and dealers. The firm is
suggested to collaborate with industry association and suppliers to enhance sustainability across
the supply chain. This recommendation will help the Dacia gain adequate supply of essential raw
materials. In addition to this closely connected suppliers will also provide the company
information about chances of supply shortage in future so that the company is able to maintain
production of goods at all times.
This recommendation also related to the elements of triple bottom line. The respective
firm will be able to make positive impact on the environment by collaborating with suppliers and
industry association to enhance supply chain sustainability. In addition to this, Dacia will be able
to reduce chances of production stoppage in future and supply good quality products in timely
manner. This will help the firm maximise profitability at all times. In terms of social benefit this
recommendation will lead to construction of industry communities which will strengthen auto-
mobile economy.
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CONCLUSION
From the above report it is determined that business firms in the manufacturing sector
face various supply chain and operations management issues. Sustainability, inadequate supply
of essential raw material and consumer demand for quality and speed. Low quality of products,
lack of sustainability and late delivery of produce reduce profitability and consumer retention of
the company. In case of the auto-mobile manufacturing industry the delivery system of
manufacturing products as per consumer demand and automotive infrastructure supports market
requirements for manufacturing firms. This system and infrastructure provides benefits and also
has limitations. Business firms need to utilize quality management practices as it will help the
company gain success by fallowing the triple bottom line.
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REFERENCES
Books and Journals
Birkel, H. S. and Müller, J. M., 2020. Potentials of industry 4.0 for supply chain management
within the triple bottom line of sustainability–A systematic literature review. Journal of
Cleaner Production, p.125612.
Chen, J., Wang, K. and Huang, Y., 2020. An integrated inbound logistics mode with intelligent
scheduling of milk-run collection, drop and pull delivery and LNG vehicles. Journal of
Intelligent Manufacturing, pp.1-9.
Farah, M. F., Ramadan, Z. B. and Harb, D. H., 2019. The examination of virtual reality at the
intersection of consumer experience, shopping journey and physical retailing. Journal
of Retailing and Consumer Services, 48. pp.136-143.
O'Brien, J., 2018. Supplier relationship management: Unlocking the hidden value in your supply
base. Kogan Page Publishers.
Pettit and et. al., 2019. The evolution of resilience in supply chain management: a retrospective
on ensuring supply chain resilience. Journal of Business Logistics, 40(1). pp.56-65.
Rajeev and et. al., 2017. Evolution of sustainability in supply chain management: A literature
review. Journal of Cleaner Production, 162. pp.299-314.
Svensson and et. al., 2018. Framing the triple bottom line approach: direct and mediation effects
between economic, social and environmental elements. Journal of cleaner
production, 197. pp.972-991.
van Kemenade, E. and Hardjono, T. W., 2019. Twenty-first century total quality management:
the emergence paradigm. The TQM Journal.
Wu and et. al., 2020. Optimisation evaluation on material distribution systems: from the
perspective of automobile manufactures. International Journal of Technology, Policy
and Management, 20(2). pp.104-115.
Online
Chips shortage stops Dacia production, 2021. [Online] Available through <https://www.just-
auto.com/news/chips-shortage-stops-dacia-production/>
Dacia battles to keep prices down as CO2 pressure rises, 2020. [Online] Available through
<https://europe.autonews.com/automakers/dacia-battles-keep-prices-down-co2-
pressure-rises>
Dacia Sandero Stepway: It’s all the car you need, but not quite the car it should be, 2021.
[Online] Available through <https://www.irishtimes.com/life-and-style/motors/dacia-
sandero-stepway-it-s-all-the-car-you-need-but-not-quite-the-car-it-should-be-
1.4700778>
The success of Dacia Sandero leads to delivery delays, 2021.[Online] Available through
<https://newsbeezer.com/romaniaeng/the-success-of-dacia-sandero-leads-to-delivery-
delays/>
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